Apple is developing AI technology to power self-driving cars. But the tech giant is late to the game and may have to blow through a lot of cash to catch up. Investors could punish Apple if the company doesn’t deliver a worthy self-driving product.
So now we finally know that the Apple car isn’t going to be an actual car, based on CEO Tim Cook’s revelation to Bloomberg’s Emily Chang.
Instead, Apple is working on the artificial-intelligence-based self-driving technology.
“We’re focusing on autonomous systems,” Cook told Chang in an interview. “It’s a core technology that we view as very important … We sort of see it as the mother of all AI projects.”
With this news, the big Silicon Valley pivot away from building a brave new type of car and a reversion to what the tech industry does best is complete.
Google has retired its podmobiles and will henceforth work with Fiat Chrysler Automobiles on commercializing its autonomous systems. Wall Street analysts have decided that it would be foolish to invest in Tesla as a carmaker and would rather buy into its $50-billion-plus market cap to see if CEO Elon Musk can create an all-new mobility/data business.
You could read Apple’s announcement in two ways. First, as a company that authentically wants to get in on the alleged disruption of the transportation industry that you’ve likely been hearing about, largely because Silicon Valley never stops talking about it.
Second, as a white flag of surrender. If Cook is for real and Apple is going to dive into autonomous and electrified vehicles, the tech giant is so far behind that investors will pummel the company if it blows through significant cash trying to catch up.
Are you an optimist or a pessimist?
- Brendan McDermid/Reuters
So the optimist’s view and the pessimist’s view. For popular consumption, Cook is, of course, going to talk up Apple’s transportation efforts, despite the lack of any sort of meaningful engagement on this front beyond Apple CarPlay. The main Silicon Valley company that’s deeply involved in transportation, Tesla, has seen a nearly 70% appreciation in its share price over the first six months of 2017. That’s impossible to avoid.
And yet unlike Steve Jobs, who had a simple plan for making people happy with easy-to-use computers and sexy entertainment-oriented devices, Cook has adopted the technocratic lingo of engineered futurism that now defines the conversation about transportation tech. It sounds good, but the tech is far from hitting the streets.
“You’ve got kind of three vectors of change happening generally in the same time frame,” Cook told Chang, speaking of autonomous vehicles, EVs, and ride-hailing.
What Cook meant is that you have three new or relatively new (compared to Apple) buzzy tech firms making major noise about those ideas: Google, Tesla, and Uber.
It’s frankly odd that Apple would be seriously thinking about getting in on this action. If the company – at its core, a design firm – wanted to do cars, it should have just done cars. Tesla has shown that a seat-of-the-pants automaker can be created in the 21st century. But Apple serially botched everything about doing a car and ended up killing what was the original Project Titan in favor on this different, wonkier concept.
It’s even more baffling that Apple would go all hot-and-heavy on AI when the biggest opportunity for it to actually disrupt an industry would be televisions. It’s entirely questionable whether anyone would want to buy an Apple car, or Apple car related services. But a large number of folks would likely want to buy a proper Apple TV (as opposed to the streaming box the company currently makes).
Or maybe a cynic?
Then again, we’ve seen this movie before. Cook has been an able steward of Apple’s legacy, but he also hasn’t been able to launch that new world-changing product yet – and every year he doesn’t, the more Apple must rely on the cash-cow iPhone.
The cynic in me says that Cook is just talking up mobility because investors are excited about the prospects of self-driving cars and that for an Apple CEO to embrace the idea sends a stock-price boosting signal (he did share the news, after all, with Bloomberg).
The realist says that Apple will really get out of its depth here and could start to shift into capital-destruction mode. The car business is notoriously volatile and capital-intensive. For Apple to enter it at any level more intensely than it has so far could be ruinous.
This column does not necessarily reflect the opinion of Business Insider.